I have a quick small business related question if you don't mind, though I'd rather take it to e-mail.
I don't think the bean counters hang out here...not that they shouldn't but they're probably just, well, counting stuff...
I'm a cpa Send me all your cash immediately and I will take care of it. Go ahead caller what is your question (not that I will have an answer)
Hello CPA's; I have an online small eBay business and have a quick question. I obtained my tax ID in Dec 2003 and have been selling online since. My question is because I have no employees, what do I do about Federal withholding? Do I open a business banking account and put in 30% each month for federal and SS? My estimated gross income from 12/2003 to the 12/2004 will be 24K. I'm just worried that I'm going to owe the IRS a boat load of money. The ironic thing is, I have a BBA in Accounting (haha looking for employment, entry level!)
I took an accounting class last semester and my understanding (for what its worth) is that your business is a sole proprietorship so the only taxable income comes from the profit gained by the business. And you are liable to pay FICA and SS quarterly (or more frequently based on actual amount) based on your profit from the business. I read that...if a deposit (of withholding) is less than $1000 at the end of the current quarter the deposit should be paid with Form 941 by the end of the month following end of the quarter. Form 941 I may not be understanding your post, but you paid nothing via a 941 form (or electronic deposit) to the government? Looking at the form you will owe the gov 12.4% for SS and 2.9% for Medicare and then you are also going to personally have to pay 12.4% and the 2.9% in April (employer pays half)...then you also have state taxes to pay (good luck). After taking that class I understand much more about small businesses and why they say that small business are taxed kind of heavily. Once again I only took a one semester class at a community college so take my post for what its worth to you.
i understand that if you have employees, you have to do the 941 form? Whate if you do not have any employees?
My bad you put tax id, not an employer id, but I think that you can consider yourself an employee and file with the 941 quarterly or you could pay at the end of the year this way via a form 1040 SE (self employment): Pub 533 Hopefully you saved a lot of money, b/c $6,600 is a lot to have to come up with. Once again I am only a one semester Information Tech student (only taking it b/c its required), so...
Go to http://www.irs.gov/publications/p15/index.html and download Circular E, Employer's Tax Guide. The IRS website is not too easy to navigate, but it does have much useful information. Don't forget state unemployment taxes. You can find info on the Texas Workforce Commission website at http://www.twc.state.tx.us/. You should do this sooner, rather than later. I am not a CPA but I did sleep at Holiday Inn Express last night.
Buy a truck or an SUV over 6000 lbs GVWR this December, and you won't owe a penny on that 24K.......even if you put nothing down and finance it.
UT- No real reason to consider yourself an employee. All that does is makes you have to pay unemployment insurance on yourself and causes you do do a lot more tax filing thn is necessary. You do still have to pay SS and medicare but just pay them with your quarterly Federal estimates.
do I have a choice of either making quarterly payments ( i have no employees) or can I file at the end of the tax year and pay a lump?>
